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PRETORIA PORTLAND CEMENT COMPANY LIMITED - RESULTS

Release Date: 05/05/2000 08:55
Code(s): PPC
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PRETORIA PORTLAND CEMENT COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
COMPANY REGISTRATION NUMBER 01/00667/06

INTERIM REPORT FOR THE HALF-YEAR ENDED 31 MARCH 2000
CONSOLIDATED INCOME STATEMENT YEAR SIX MONTHS ENDED ENDED 31 MARCH 31 MARCH 30 SEPT. 2000 1999 % 1999 UNAUDITED UNAUDITED CHANGE AUDITED RM RM RM
TURNOVER 891,3 891,4 - 1 894,0 OPERATING PROFIT 123,8 115,2 7 242,0 INVESTMENT INCOME AND
INTEREST RECEIVED 20,1 14,8 30,7 PROFIT BEFORE INTEREST
PAID AND TAXATION 143,9 130,0 11 272,7 INTEREST PAID 23,0 24,7 53,8 PROFIT BEFORE EXCEPTIONAL
ITEMS 120,9 105,3 15 218,9 EXCEPTIONAL ITEMS - 3,0 (12,9) PROFIT BEFORE TAXATION 120,9 108,3 12 206,0 TAXATION 32,9 (5,1) 25,0 PROFIT AFTER TAXATION 88,0 113,4 (22) 181,0 SHARE OF ASSOCIATE COMPANIES' RETAINED
PROFIT/(LOSS) 2,6 (4,0) 3,7 NET PROFIT ATTRIBUTABLE
TO SHAREHOLDERS 90,6 109,4 (17) 184,7 ORDINARY SHARES OF R1 EACH FULLY PAID
IN ISSUE (000) 50 001 49 982 49 982 WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE
DURING THE PERIOD (000) 49 996 48 038 49 496 EARNINGS PER SHARE EXCLUDING EXCEPTIONAL ITEMS AND DEFERRED
TAX RATE ADJUSTMENT 181,2 159,4 14 331,7 EXCLUDING EXCEPTIONAL
ITEMS 181,2 221,5 (18) 391,9 INCLUDING EXCEPTIONAL
ITEMS 181,2 227,7 (20) 373,1 DIVIDENDS PER SHARE 90 85 6 270 CONSOLIDATED CASH FLOW STATEMENT
YEAR SIX MONTHS ENDED ENDED 31 MARCH 31 MARCH 30 SEPT. 2000 1999 1999 UNAUDITED UNAUDITED AUDITED RM RM RM CASH AVAILABLE FROM OPERATIONS 104,8 76,1 372,5 DIVIDENDS PAID (92,5) - (42,6) NET CASH FLOW FROM OPERATING
ACTIVITIES 12,3 76,1 329,9 NET CASH APPLIED TO INVESTING
ACTIVITIES (88,6) (97,9) (293,6) ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT
- EXPANSION (15,7) (64,3) (92,1) - REPLACEMENT (76,3) (44,6) (136,9) NET MOVEMENTS ON INVESTMENTS, PROCEEDS ON DISPOSAL OF PROPERTY, PLANT, EQUIPMENT
AND SUBSIDIARIES 3,4 11,0 (64,6) NET CASH FLOW FROM FINANCING
ACTIVITIES 2,8 21,8 12,2 NET (DECREASE)/INCREASE IN
LIQUID FUNDS (73,5) - 48,5 STATEMENT OF CHANGES IN EQUITY INTEREST OF SHAREHOLDERS AT
BEGINNING OF PERIOD 1 492,5 1 334,4 1 334,4 INCREASE IN SHARE CAPITAL
AND PREMIUM 0,7 108,1 108,1 OTHER MOVEMENTS 0,3 0,1 0,3 NET MOVEMENTS NOT RECOGNISED
THROUGH THE INCOME STATEMENT 1,0 108,2 108,4 NET PROFIT ATTRIBUTABLE TO
SHAREHOLDERS 90,6 109,4 184,7 DIVIDENDS (42,5) (42,5) (135,0) NET MOVEMENTS RECOGNISED
THROUGH THE INCOME STATEMENT 48,1 66,9 49,7 INTEREST OF SHAREHOLDERS AT END
OF PERIOD 1 541,6 1 509,5 1 492,5 CONSOLIDATED BALANCE SHEET
31 MARCH 31 MARCH 30 SEPT. 2000 1999 1999 UNAUDITED UNAUDITED AUDITED RM RM RM EMPLOYMENT OF CAPITAL PROPERTY, PLANT AND EQUIPMENT,
INVESTMENTS AND LOANS 1 813,0 1 688,3 1 810,3 NET CURRENT ASSETS 205,9 277,3 158,7 CURRENT ASSETS 513,6 540,7 542,4 INVENTORIES AND RECEIVABLES 513,6 515,7 468,9 LIQUID FUNDS - 25,0 73,5 CURRENT LIABILITIES 307,7 263,4 383,7 SHORT-TERM BORROWINGS 27,1 29,9 25,0 ACCOUNTS PAYABLE 238,1 191,0 266,2 SHAREHOLDERS FOR DIVIDEND 42,5 42,5 92,5 2 018,9 1 965,6 1 969,0 CAPITAL EMPLOYED
CAPITAL AND PREMIUM 614,6 613,9 613,9 NON-DISTRIBUTABLE RESERVES AND
RETAINED PROFIT 927,0 895,6 878,6 SHAREHOLDERS' EQUITY 1 541,6 1 509,5 1 492,5 LONG-TERM BORROWINGS 267,2 271,9 267,2 DEFERRED TAXATION 210,1 184,2 209,3 2 018,9 1 965,6 1 969,0 NOTES
SIX MONTHS ENDED YEAR ENDED 31 MARCH 31 MARCH 30 SEPT. 2000 1999 1999 UNAUDITED UNAUDITED AUDITED RM RM RM 1. PROFIT BEFORE TAXATION INCLUDED IN PROFIT BEFORE TAXATION IS:
DEPRECIATION 73,6 61,9 131,8 COST OF SALES 570,0 591,2 1 453,8 2. TAXATION
THE CHANGE IN THE COMPANY TAX RATE FROM 35% TO 30% DURING 1999 RESULTED IN A TAX CREDIT OF R29,8 MILLION CALCULATED ON THE OPENING DEFERRED TAX BALANCE AT 1 OCTOBER 1998. THIS CREDIT WAS INCLUDED IN THE MARCH 1999 RESULTS. 3. NET PROFIT EXCLUDING EXCEPTIONAL ITEMS NET PROFIT ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 90,6 109,4 184,7
IMPAIRMENT LOSSES - - 13,4
OTHER - (3,0) (0,5)
TAXATION - - (3,6) NET PROFIT EXCLUDING EXCEPTIONAL
ITEMS 90,6 106,4 194,0
DEFERRED TAX RATE ADJUSTMENT - (29,8) (29,8) NET PROFIT EXCLUDING EXCEPTIONAL ITEMS AND DEFERRED TAX
RATE ADJUSTMENT 90,6 76,6 164,2 4. INVESTMENTS
UNLISTED AT COST 204,9 122,7 204,9 UNLISTED ASSOCIATES AT
CARRYING VALUE 45,4 34,5 47,9 DIRECTORS' VALUATION OF INVESTMENTS
UNLISTED 209,2 129,9 209,2
UNLISTED ASSOCIATES 116,1 77,9 89,6 5. BORROWINGS THE COMPANY'S BORROWING POWERS ARE NOT RESTRICTED
BORROWINGS 294,3 301,8 292,2 6. COMMITMENTS
CAPITAL COMMITMENTS 53,2 77,9 101,4
CONTRACTED 38,1 76,7 64,1
APPROVED 15,1 1,2 37,3
LEASE COMMITMENTS 4,9 3,4 9,7
58,1 81,3 111,1 7. CONTINGENT LIABILITIES
THERE ARE CONTINGENT LIABILITIES IN RESPECT OF GUARANTEES COVERING LOANS, BANKING FACILITIES AND OTHER OBLIGATIONS OF SUBSIDIARIES AND OTHER THIRD PARTIES LIMITED TO R5,5 MILLION. COMMENT
EARNINGS PER SHARE OF 181.2 CENTS FOR THE HALF YEAR ARE 14% HIGHER THAN LAST YEAR EXCLUDING THE FAVOURABLE IMPACT OF THE R29.8 MILLION RELEASE OF DEFERRED TAX IN THAT PERIOD. INCLUDING THIS RELEASE IN LAST YEAR'S EARNINGS, EARNINGS PER SHARE DECLINED BY 18%.
OPERATING PROFIT INCREASED BY 7% ON UNCHANGED TURNOVER, DESPITE LOWER CEMENT VOLUMES AND SOME INCREASES IN COSTS CAUSED BY THE RECENT EXCEPTIONAL RAINS. THE CEMENT DIVISION OPERATING PROFIT (INCLUDING INCOME FROM ASSOCIATES) ROSE BY 24%, MORE THAN OFFSETTING THE DECLINE IN OPERATING PROFITS IN THE LIME, PACKAGING AND LOGISTICS DIVISIONS.
STRICT WORKING CAPITAL MANAGEMENT AND THE LOWER LEVELS OF CAPITAL EXPENDITURE AND INTEREST RATES, REDUCED FINANCING COSTS.
CAPITAL EXPENDITURE DECLINED TO R92 MILLION (1999: R108.9 MILLION), WHILE CASH AVAILABLE FROM OPERATIONS IMPROVED FROM R76.1 MILLION TO R104.8 MILLION. CEMENT
THE HEAVY RAINS AND FLOODING IN THE SUMMER RAINFALL AREAS INCREASED
DISTRIBUTION COSTS AND CAUSED OUR DOMESTIC VOLUMES TO DECLINE BY 6% COMPARED TO THE CORRESPONDING PERIOD LAST YEAR.
IN SPITE OF THESE SETBACKS, IMPROVED CEMENT PRICES, LOWER PRODUCTION COSTS AND BAD DEBTS, AND INCREASED INCOME FROM ASSOCIATES IMPROVED THE OPERATING PROFIT MARGIN TO 17.7% AND THE OPERATING PROFIT ROSE 24% TO R110.8 MILLION.
DURING THE PERIOD PPC BOTSWANA (PTY) LTD ACQUIRED A 50% INTEREST IN THE KGALE QUARRY AND 100% OF THE ASSETS OF THE PIONEER READYMIX OPERATION, BOTH IN GABERONE, FOR A TOTAL OF R19.7 MILLION. LIME
LIME VOLUMES IMPROVED SLIGHTLY, BUT INCREASED DEPRECIATION CHARGES AND PRODUCTION PROBLEMS CAUSED MAINLY BY THE ABNORMALLY HIGH RAINFALL IN THE NORTHERN CAPE, RESULTED IN A 2% REDUCTION IN OPERATING PROFIT.
PPC SALDANHA MATERIAL HANDLING TURNOVER INCREASED, GENERATING A SMALL PROFIT COMPARED TO THE LOSS LAST YEAR, BUT CONTINUES TO UNDER-PERFORM EXPECTATIONS DUE TO SALDANHA STEEL'S SLOWER THAN ANTICIPATED START-UP. PACKAGING AND LOGISTICS
THE PACKAGING AND LOGISTICS DIVISIONS REPORTED LOWER OPERATING PROFITS. BOTH DIVISIONS WERE NEGATIVELY INFLUENCED BY THE LOWER CEMENT DEMAND AND IN ADDITION, THE PACKAGING DIVISION EXPERIENCED INCREASED COMPETITION IN NON-CEMENT PACKAGING MARKETS LOCALLY AND ABROAD. ASSOCIATE COMPANIES
THE SHARE OF ASSOCIATE COMPANIES' PROFITS IMPROVED AS A RESULT OF REDUCED LOSSES AT SLAGMENT (PTY) LTD AND A STRONGER PERFORMANCE FROM NATAL PORTLAND CEMENT CO. (PTY) LTD. PROSPECTS
PROVIDED THE ECONOMIC RECOVERY IS SUSTAINED, MODEST SALES VOLUME GROWTH SHOULD OCCUR IN THE SECOND HALF AND THIS COUPLED WITH CONTINUED IMPROVEMENT IN OPERATING EFFICIENCIES, COSTS AND SELLING PRICES SHOULD FURTHER ENHANCE OPERATING MARGINS.
PRODUCTIVITY AND COSTS CONTINUE TO BE ADDRESSED AS PART OF THE GLOBAL
COMPETITIVENESS DRIVE AND STAFF COMPLEMENT HAS BEEN REDUCED BY A FURTHER 4%. TAKING INTO ACCOUNT THE ABOVE, TOGETHER WITH THE REDUCED LEVEL OF CAPITAL COMMITMENTS, THE GROUP IS WELL PLACED TO TAKE ADVANTAGE OF ANY IMPROVEMENT IN MARKET CONDITIONS. ON BEHALF OF THE BOARD W A M CLEWLOW J E GOMERSALL
CHAIRMAN GROUP MANAGING DIRECTOR 5 MAY 2000 DECLARATION OF DIVIDEND NO. 186
INTERIM DIVIDEND NO. 186 OF 90 CENTS PER SHARE HAS BEEN DECLARED PAYABLE TO SHAREHOLDERS REGISTERED IN THE SHARE REGISTER OF THE COMPANY AT THE CLOSE OF BUSINESS ON 26 MAY 2000.
THE TRANSFER BOOKS AND REGISTER OF MEMBERS OF THE COMPANY WILL BE CLOSED FROM 27 MAY 2000 TO 2 JUNE 2000, BOTH DAYS INCLUSIVE, FOR THE PURPOSE OF DETERMINING THOSE SHAREHOLDERS TO WHOM THE DIVIDEND WILL BE PAID.
DIVIDEND WARRANTS WILL BE POSTED ON OR ABOUT 3 JULY 2000 TO SHAREHOLDERS AT THEIR REGISTERED ADDRESSES OR IN ACCORDANCE WITH THEIR WRITTEN INSTRUCTIONS RECEIVED UP TO AND INCLUDING 26 MAY 2000.
THE DIVIDEND IS DECLARED AND PAYABLE IN THE CURRENCY OF THE REPUBLIC OF SOUTH AFRICA. BY ORDER OF THE BOARD BARLOWS TRUST COMPANY LIMITED
SECRETARIES 5 MAY 2000 DIRECTORS:
WAM CLEWLOW (CHAIRMAN), J E GOMERSALL* (GROUP MANAGING DIRECTOR), D C ARNOLD, P J BLACKBEARD, R J BURN, R K J CHAMBERS, R H DENT, A J LAMPRECHT, P G NELSON, AJ PHILLIPS*, P STUIVER , R S TENNANT, EPTHERON. * BRITISH DUTCH REGISTERED OFFICE: BARLOW PARK KATHERINE STREET, SANDTON 2196 SOUTH AFRICA (P.O. BOX 782248, SANDTON 2146 SOUTH AFRICA) TRANSFER SECRETARIES: MERCANTILE REGISTRARS LIMITED 11 DIAGONAL STREET, JOHANNESBURG 2001 SOUTH AFRICA (P.O. BOX 1053, JOHANNESBURG 2000 SOUTH AFRICA)
THESE RESULTS AND OTHER INFORMATION IS AVAILABLE ON THE PPC INTERNET WEBSITE WWW.PPC.CO.ZA SEGMENTAL ANALYSIS TURNOVER SEGMENTAL ANALYSIS TURNOVER
YEAR
SIX MONTHS ENDED ENDED
31 MARCH 31 MARCH 30 SEPT. 2000 1999 % 1999
UNAUDITED UNAUDITED CHANGE AUDITED
RM RM RM
CEMENT 625,1 632,4 (1) 1 332,7
LIME 139,8 124,9 12 281,4 PACKAGING AND
LOGISTICS 126,4 134,1 (6) 279,9
891,3 891,4 - 1 894,0 OPERATING PROFIT INCLUDING INCOME FROM ASSOCIATES*
YEAR
SIX MONTHS ENDED ENDED
31 MARCH 31 MARCH 30 SEPT. 2000 1999 % 1999
UNAUDITED UNAUDITED CHANGE AUDITED
RM RM RM
CEMENT 110,8 89,0 24 198,4
LIME 16,1 16,5 (2) 32,7 PACKAGING AND
LOGISTICS 2,0 7,9 (75) 16,8
128,9 113,4 14 247,9 OPERATING MARGIN
YEAR
SIX MONTHS ENDED ENDED
31 MARCH 31 MARCH 30 SEPT.
2000 1999 1999
UNAUDITED UNAUDITED AUDITED
CEMENT 17,7 14,1 14,9
LIME 11,5 13,2 11,6 PACKAGING AND
LOGISTICS 1,6 5,9 6,0
14,5 12,7 13,1 NET OPERATING ASSETS
31 MARCH 31 MARCH 30 SEPT. 2000 1999 % 1999
UNAUDITED UNAUDITED CHANGE AUDITED
RM RM RM
CEMENT 1 214,0 1 320,4 (8) 1 191,3
LIME 390,0 292,3 33 355,6 PACKAGING AND
LOGISTICS 188,18 199,0 (5) 173,1
1 792,8 1 811,7 (1) 1 720,0
*OPERATING PROFIT INCLUDING INCOME FROM ASSOCIATES IS ARRIVED AT AS FOLLOWS: SIX MONTHS ENDED YEAR ENDED
31 MARCH 31 MARCH 30 SEPT.
2000 1999 1999
UNAUDITED UNAUDITED AUDITED
RM RM RM OPERATING
PROFIT 123,8 115,2 242,0 DIVIDENDS FROM
ASSOCIATES 2,5 2,2 2,2 SHARE OF ASSOCIATE COMPANIES,RETAINED
PROFIT/(LOSS) 2,6 (4,0) 3,7
128,9 113,4 247,9
PPC OPERATING PROFITS RISE AT INTERIM DESPITE IMPACT OF HEAVY RAIN ON CEMENT DEMAND
THE PPC GROUP HAS ANNOUNCED AN INCREASE IN EPS OF 14% TO 181,2 CENTS IN THE SIX MONTHS TO MARCH 2000 FROM THE EPS (EXCLUDING EXCEPTIONAL ITEMS AND THE DEFERRED TAX REVERSAL BENEFIT) OF 159,4 CENTS LAST YEAR. EARNINGS PER SHARE INCLUDING EXCEPTIONAL ITEMS FOR THE PERIOD DROPPED BY 20% TO 181,2 CENTS (1999: 227,7 CENTS).
AN INCREASED INTERIM DIVIDEND OF 90 CENTS PER SHARE (1999: 85 CENTS) HAS BEEN DECLARED.
OPERATING PROFIT INCREASED BY 7% TO R124 MILLION (1999: R115 MILLION), DESPITE LOWER CEMENT SALES VOLUMES AND SOME INCREASES IN COSTS CAUSED BY THE RECENT EXCEPTIONAL RAINS. TURNOVER FOR THE PERIOD REMAINED STATIC AT R891 MILLION. GROUP MANAGING DIRECTOR, JOHN GOMERSALL SAYS:
REDUCED CAPITAL EXPENDITURE AND GOOD WORKING CAPITAL MANAGEMENT RESULTED IN LOWER FINANCING COSTS, HOWEVER THE TAXATION RATE FOR THE PERIOD WAS HIGHER DUE TO THE BENEFIT IN 1999 OF THE RELEASE OF DEFERRED TAX PROVISION.
CASH FROM THE OPERATIONS IMPROVED FOR THE SIX MONTHS FROM R76 MILLION TO R104 MILLION. CEMENT
CEMENT OPERATING PROFIT INCLUDING INCOME FROM ASSOCIATES, INCREASED BY 24% TO R110 MILLION (1999: R89 MILLION) AND TURNOVER DECLINED BY 1% TO R625 MILLION (1999: R632).
HIGHER CEMENT PRICES, LOWER PRODUCTION COSTS AND BAD DEBTS, AND INCREASED INCOME FROM ASSOCIATES IMPROVED THE OPERATING PROFIT MARGIN TO 17,7%, RESULTING IN THE NOTABLE IMPROVEMENT IN OPERATING PROFITS, CONTINUES GOMERSALL.
DURING THE SIX MONTHS, PPC BOTSWANA ACQUIRED A 50% INTEREST IN THE KGALE QUARRY AND 100% OF THE ASSETS OF PIONEER READYMIX IN GABERONE, FOR A TOTAL OF R19,7 MILLION. LIME
PPC LIME POSTED A 12% INCREASE IN TURNOVER OF R139 MILLION (1999: R124 MILLION) LIME PRODUCTION COSTS WERE NEGATIVELY EFFECTED BY THE EXCESSIVE RAINFALL AND AN INCREASED DEPRECIATION CHARGE.
PPC SALDANHA MATERIAL HANDLING TURNOVER INCREASED, GENERATING A SMALL PROFIT COMPARED TO THE LOSS LAST YEAR, BUT CONTINUES TO UNDER-PERFORM EXPECTATIONS DUE TO SALDANHA STEEL'S SLOWER THAN ANTICIPATED START-UP. HOWEVER WE ARE SATISFIED THAT IT WILL DELIVER THE EXPECTED RETURNS OVER THE LONG TERM, SAID GOMERSALL. PACKAGING AND LOGISTICS
THE PACKAGING AND LOGISTICS DIVISIONS REPORTED A 6% DECLINE IN TURNOVER AND OPERATING PROFITS DECLINED TO R2 MILLION (1999: R7,9 MILLION) DUE TO THE KNOCK-ON EFFECT OF LOWER CEMENT SALES AND THE IMPACT IN THE PACKAGING DIVISION OF INCREASED COMPETITION IN NON-CEMENT PACKAGING MARKETS. OUTLOOK
HOPEFULLY MODEST VOLUME GROWTH SHOULD OCCUR IN THE NEXT SIX MONTHS, WHICH COUPLED WITH IMPROVED OPERATING EFFICIENCIES AND COST REDUCTIONS SHOULD SEE A CONTINUED IMPROVEMENT IN OPERATING MARGINS, CONCLUDES GOMERSALL.

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